Superannuation and infrastructure have a lot in common, and so they should: they represent two sides of the same coin.
Superannuation plays an important role in intermediating national savings for financing and funding infrastructure. But the public policy settings that enable this to happen must be soundly based.
As has been widely reported, the Australian Federal Government is seeking to define and legislate an objective for superannuation. This is important, because in the absence of clear objectives, governments enjoy more latitude to tinker with short-term priorities without accountability to the risks of inferior long-term outcomes.
It is an indictment on public policy that super has been without any legislated objective since it began in 1992: but it is hardly a one-off.
Infrastructure is in a similar situation but curiously, Infrastructure Australia (IA) doesn’t seem to mind.
Billions of taxpayers’ dollars spent on building roads, for example, is not anchored to a consistent and enduring objective. Could this be a reason why so little benefit is translating to the community from more than a decade of big-dollar transport spending?
Despite the plethora of recommendations from the IA latest audit, the nation’s independent adviser appears hamstrung by a focus on its favourite project list. In part this is courtesy of poorly conceived terms of reference. Australia benefited enormously when objectives of monetary policy were clarified and good institutional arrangements followed, including Reserve Bank independence.
The nation must heed lessons from its past: good governance begets great long-term outcomes.
There is still time for IA to sharpen the national infrastructure pencil through championing good governance.
It can do this by helping develop a clear strategic objective that government can legislate into law. For example, one that takes account of roads within the broader transport system and how service outcomes adapt over time to a rapidly changing world.
Surely this is an appropriate starting point, along with erecting a much-needed scaffolding to reinforce good public policy outcomes like performance reporting, disseminating cost data and rigorous case studies on project and policy success and failure.
Transparency is key and it should govern every moment of IA’s existence. It will help sanitise poor decision-making and even poorer project performance and cost overruns that undermine the nation’s future.
In the case of road pricing reform, IA’s agenda must shift the mindset of all stakeholders to a new standard; it is not just about finding another funding pot.
IA appears blind sided by the evaporating revenues from fuel excise and what that means for funding new infrastructure, without deeper consideration to the long-term outcomes the community expects of their roads.
The roads sector has had a carte blanche operational model for the best part of two centuries, where political will has prevailed without the discipline of balance sheet management, commitment to service standards and rate of return on assets.
A recent Newgate survey commissioned by the Better Infrastructure Initiative points to both tolled and regular arterial roads as holding the “wooden spoon” of infrastructure when it comes to customer perceptions.
Clearly change is needed, where service quality outcomes with roads is the main game, not more bitumen. Whatever are the final reforms for roads pricing, it will be intolerable for the community to be lumbered with another new tax or user charges uncoupled from service quality.
Recognising the uncanny resemblance between infrastructure and superannuation and to act in unison fixing both is a good starting point for 2017.
That means for example, all legislation that commits funds for land transport has clear and actionable objectives enshrined in law.
Australia was a world leader in infrastructure, and we can do it again starting with land transport. Rigorous reform through corporatisation and privatisation from the late 1980s and 1990s is still reaping dividends but is badly in need of the next tranche.
New South Wales and Victoria are channelling this golden era of infrastructure to good effect, but the social licence to sell assets is fragile, and needs ongoing stewardship.
Unfortunately, IA with its project list and appetite for big spending is falling short of challenging the nation to innovate through doing more with less. There is much to be gained for IA to pursue deep infrastructure governance reform, starting with establishing strong objectives to help ensure great long-term outcomes.
* Garry Bowditch is Executive Director, Better Infrastructure Initiative, John Grill Centre for Project Leadership, University of Sydney. This article appeared in the Australian Financial Review on 5 December 2016.